Posted on September 04, 2014
Gold Spot Price Open: $1,269
Gold Spot Price Close: $1,262
Change in Gold Spot Price: -$7
Silver Spot Price Open: $19.22
Silver Spot Price Close: $19.13
Change in Silver Spot Price: -$0.09
Precious metals began the day in upbeat fashion, but by the time things were all said and done the selling pressure piled on and gains turned to losses. When all was said and done, gold lost about 7 dollars while silver declined by nearly ten cents. Platinum finished the day down a few dollars, but palladium was up by almost 15 dollars.
Even before this week got started, there was no denying the importance of the European Central Bank’s monthly policy meeting. With talk of monetary stimulus on the table, investors were always going to be paying close attention to the meeting’s proceedings. Shortly before US markets opened today, it was announced that the ECB reduced its main refinancing rate to an all-time low of .05%. As you might have expected, this shift in policy caused the Euro to decline considerably. As a result, the USD index made decent strides forward and hit another 13-month high.
Despite today’s ECB rate cut being initially beneficial for precious metals, the progress of the US Dollar ended up weighing on spot values and turned marginal gains into marginal losses.
Discussing the ECB meeting was Eric Stein of Eaton Vance Corp., when he said that “there were big expectations, and they met and exceeded those expectations with doing more. Draghi is on a clear path to provide as much monetary stimulus as he can to weaken the currency, increase inflation expectations, decrease deflationary expectations, and also keep the European economy on life support.”
Though tomorrow’s Labor Department employment report is undoubtedly the most important piece of economic data being made public this week, a few reports published today had their impact on the marketplace as well. For one, the payroll processor ADP reported that private-sector job growth was on the up and up for yet another month during August.
According to the Institute for Supply Management, service sector activity in the United States expanded in August for the 55th consecutive month. The report went on to say that the current rate of growth being experienced by the US service sector is exceeding expectations by a good bit. All of this data ended up being beneficial for the US Dollar, so much so that the progress of spot values was halted in its tracks.
Now, the attention of investors will shift to tomorrow’s release of the US Labor Department’s employment for August. As it stands, the marketplace is anticipating that at least 220,000 new non-farm jobs were added to the US economy last month. If these expectations end up coming to fruition, most experts anticipate that the USD will be given even more of a boost. For precious metals, this may not be so good.
Looking ahead to the last day of the week, it is clear to see that the undivided attention of investors will be fixated upon the mid-afternoon release of the latest employment report. US equity markets traded down today, so it will be intriguing to see what kind of impact tomorrow’s employment report will have on US stocks.